UPDATE 2-Elan to return $1 bln to shareholders from MS drug sale

* Elan (Other OTC: ELNCF - news) to buy back $1 bln of shares after Tysabri sale

* Deal is "unique opportunity" to reward shareholders

* Firm still working on acquisitions with rest of proceeds

* Shares climb over 4 percent

By Stephen Mangan

DUBLIN, Feb 22 (Reuters) - Irish drugmaker Elan will return $1 billion to shareholders, giving them an immediate boost from the sale of its stake in multiple sclerosis (MS) treatment Tysabri to partner Biogen Idec (NasdaqGS: BIIB - news) .

Elan shares climbed over 4 percent following the announcement on Friday, which also reiterated the company's intention to make acquisitions with the rest of the $3.25 billion raised from the deal.

Tysabri was by far Elan's most important product, responsible for almost all its revenue and its sale creates uncertainty over the future shape of the company.

"Close to 40 percent of Elan's current market cap could be invested in as yet unknown assets ... we are unlikely to gain the visibility needed to become constructive on the shares until transactions are concluded," said Deutsche Bank (Xetra: 514000 - news) analyst Richard Parkes.

Elan is already pursuing potential deals for the next 12-18 months, Chief Executive Kelly Martin told Reuters in an interview this month, which he said may not necessarily be restricted to the firm's past areas of activity.

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UPDATE 2-Elan to return $1 bln to shareholders from MS drug sale